Propane prices, supply add to winter's sting

Wednesday

Feb 5, 2014 at 6:00 AMFeb 5, 2014 at 4:38 PM

Local energy prices are up because of increased demand nearly across the board, as temperatures fall to below freezing for days at a time and people crank up their heating systems. Propane has been attracting a lot of attention in particular during this pinch because customers buy large quantities of the product at a time, then buy more when needed rather than paying for it on a monthly basis through a bill sent by a utility company.

By Alli Knothe TELEGRAM & GAZETTE STAFF

WORCESTER — Local energy prices are up because of increased demand nearly across the board, as temperatures fall to below freezing for days at a time and people crank up their heating systems.

Propane has been attracting a lot of attention in particular during this pinch because customers buy large quantities of the product at a time, then buy more when needed rather than paying for it on a monthly basis through a bill sent by a utility company.

That makes things difficult for propane consumers — especially people who are low-income, because the tanks are often filled by no less than several hundred dollars at a time.

"Our phones are ringing off the hook for people looking for help with fuel assistance," said Mary Knittle, director of energy programs at the Worcester Community Action Council.

Just 300 of the organization's nearly 14,000 eligible clients use propane for their heat, yet Ms. Knittle said that "after one or two deliveries, (those clients) have exhausted their benefits."

While people are encouraged to plan ahead and budget those funds by purchasing the propane in the summer when it is substantially less expensive, she said that unforeseen circumstances, such as the loss of a job or medical emergency, can put needy families in a real bind.

"For some of these people, they just don't have it," Ms. Knittle said.

At Dileo Gas Inc. on Route 20, co-owner Harry Dileo said that his company has tried to work with those customers to help them get through the rest of the cold season.

"A lot of our customers are on fuel assistance," he said.

This time of year, the family business sells about 5,000 gallons of propane per day, and buys about 10,000 gallons at a time. With a 30,000-gallon holding tank, Mr. Dileo said that there is a quick product turnover and the company has to work constantly to ensure it is getting the lowest price possible, even if that means going as far as Canada to get it.

Mr. Dileo also explained that there is an increase in demand, as new houses are "moving away from oil and toward propane and natural gas."

As the price goes up though, the company has absorbed much of that increase in cost, he said, and while other distributors may increase prices by as much as $1 to cover the increase in cost per gallon, Dileo customers have not seen a jump of more than 10 or 15 cents.

The average price of propane is currently $3.65 per gallon, up from $3.12 last year, according to the Massachusetts Department of Energy Resources.

The department surveys the price each week based on the average price to fill-up 100 to 150 gallons.

"The propane price year over year is up about 50 cents a gallon, which certainly is not good," said Joe Rose, president of the Propane Gas Association of New England, which represents propane gas suppliers in the area.

Mr. Rose is quick to note that there is no actual propane shortage in the area. "With this cold weather we're having, (suppliers) had to go to the open market to meet that demand."

In New England, that meant ordering shipments from Europe and Africa to meet demand, despite the fact that prices are about 70 or 80 cents more expensive per gallon than the domestic product, he said. While the situation is not uncommon, it does drive prices up even further for the season, especially when this season the domestic propane, transported by train and pipeline from Texas and the Gulf Coast, is supplying just 60 percent of the market.

There was another holdup when railroad cars used to fill the gap between domestic demand and what can be pumped through the pipeline were running nearly two weeks behind schedule because of inclement weather.

"By April I would fully expect the prices to be back to normal," he said.

Contact Alli Knothe at allison.knothe@telegram.com. Follow her on Twitter @KnotheA

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